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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. A period of time too short to change the size of the plant - but many other - more variable resources can be changed to meet demand






2. Measures the cost the firm incurs from using an additional unit of input. In a perfectly competitive labor market - MRC = Wage. In a monopsony labor market - the MRC > Wage






3. 0 < Ei < 1






4. A good for which higher income increases demand






5. The change in quantity demanded resulting from a change in the price of one good relative to other goods






6. A good for which higher income decreases demand






7. The mechanism for combining production resources - with existing technology - into finished goods and services






8. Ed = 0 - no response to price change






9. A group of firms that agree not to compete with each other on the basis of price - production - or other competitive dimensions. Cartel members operate as a monopolist to maximize their joint profits






10. The downward part of the LRAC curve where LRAC falls as plan size increases. This is the result of specialization - lower cost of inputs - or other efficiencies of larger scale.






11. The difference between the price received and the marginal cost of producing the good. It is the area above the supply curve and under the price






12. Exists if a producer can produce more of a good than all other producers






13. Occurs when LRAC is constant over a variety of plant sizes






14. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.






15. The rate paid on the last dollar earned. This is found by taking the ratio of the change in taxes divided by the change in income






16. Two goods are consumer substitutes if they provide essentially the same utility to consumers






17. The difference between total revenue and total explicit and implicit costs






18. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market






19. A measure of industry market power. Sum the market share of the four largest firms and a ratio above 40% is a good indicator of oligopoly






20. The lost net benefit to society caused by a movement away from the competitive market equilibrium






21. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)






22. Models where firms agree to mutually improve their situation






23. Ei > 1






24. Entry (or exit) of firms does not shift the cost curves of firms in the industry






25. AVC = TVC/Q






26. The price of a good measured in units of currency






27. Exists at the point where the quantity supplied equals the quantity demanded






28. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax






29. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand






30. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good






31. The output where ATC is minimized and economic profit is zero






32. For one good - constrained by prices and income - a consumer stops consuming a good when the price paid for the next unit is equal to the marginal benefit received






33. Pm > MR = MC - which is not allocatively efficient and dead weight loss exists. Pm > ATC - which is not productively efficient. Profit > 0 so consumer surplus is transferred to the monopolist as profit






34. The study of how people - firms - and societies use their scarce productive resources to best satisfy their unlimited material wants.






35. The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment






36. The total quantity - or total output of a good produced at each quantity of labor employed






37. Ei = (%dQd good X)/(%d Income)






38. Product demand - productivity - prices of other resources - and complementary resources






39. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good






40. The additional cost incurred from the consumption of the next unit of a good or a service






41. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good






42. Costs that change with the level of output. If output is zero - so are TVCs.






43. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter






44. The difference between your willingness to pay and the price you actually pay. It is the area below the demand curve and above the price






45. Ed = (%dQd)/(%dP). Ignore negative sign






46. A legal maximum price above which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent shortage






47. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied






48. In the case of a public good - some members of the community know that they can consume the public good while others provide for it. This results in a lack of private funding and forces the government to provide it






49. Additional benefits to society not captured by the market demand curve from the production of a good - result in a price that is too high and a market quantity that is too low. Resources are underallocated to the production of this good






50. The upward part of the LRAC curve where LRAC rises as plant size increases. This is usually the result of the increased difficulty of managing larger firms - which results in lost efficiency and rising per unit costs.